By Buying More than 1000 IBM Patents, Google to Turn from Victim to Bully?

Google (NASDAQ: GOOG) appears to be shrugging off its image of a victim of vicious tech patent warfare and making up its mind on engaging the senseless situation from a pedestal of power.

The company has confirmed that it has bought more than 1,000 technology patents from International Business Machines Corp. (NYSE: IBM), covering a broad range of technologies, including fabrication and architecture of memory and microprocessor chips, server and router design, and software programming such as relational databases and object oriented programming.

Beefing up Patent Portfolio

Why does Google need to beef up its patent portfolio? Kent Walker, Google's general counsel, says the main reason behind upping the ante in patent warfare is that Google is a comparatively young company, and "although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories."

"The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation. Some...are motivated by a desire to block competing products or profit from the success of a rival's new technology," Walker said.

Google had earlier lost a multi-billion dollar bidding war for acquiring 6,000 patents of the bankrupt Nortel Networks. These patents were eventually bought for $4.5 billion by a consortium that included Apple, Microsoft, and RIM, which are all direct competitors of Google's Android OS.

Multiple Lawsuits

Google is facing multiple lawsuits for many of its services, including Android mobile operating system apart from the big ticket patent wrangle with Oracle Corp. (NASDAQ: ORCL) over the use of Java in Android.

Of late the Android has faced more heat from Apple which has opened up multiple war fronts against Google's open source mobile operating system by legally challenging Android manufacturers like HTC and Samsung. On top of it, Microsoft is approaching various Android manufacturers for patent licensing fees.

Eroding worth of Patents

The intrinsic worth of patents have been eroded in recent years as tech companies adopted it as a business plan to muzzle competition and stifle innovation.

Just look at how Java father James Gosling commented about the mulit-billion dollar patent war between Google and Oracle. He said the feud was a skirmish which wasn’t "much about patents or principles or programming languages. The suit is far more about ego, money and power."

Tech analysts and legal circles have often commented about the absurdity of most patent battles. "The intent is to be ambiguous enough in defining what exactly the patent is that you can apply it to virtually anything in the event that you choose to instigate a patent infringement lawsuit, or end up needing to defend yourself against one," wrote Tony Bradley in PC World.

Gosling has narrated how Oracle lawyers’ eyes "sparkled" when they were briefed about the patent issues between Sun and Google by Sun employees, during the integration process.

Another Bidding War over InterDigital Patents Looms

Jefferies analysts said in a note last week that another patent bidding war is looming over the InterDigital patents, where Google and Apple will lock horns. For these rivals, acquiring InterDigital's patents will directly translate into the pricing competitiveness of the smartphones using their operating systems, iOS and Android. It is calculated that InterDigital patents could save Apple $3 to $10 per handset, turning the heat on Android.

InterDigital has initiated a process to explore potential strategic options, which may include a sale or other transaction. InterDigital has about 180 engineers, more than 18,000 patents (awarded and pending), and about 16 percent of the essential LTE patents versus 3 percent held by Nortel. According to Jefferies InterDigital's patent portfolio is broadly accepted and its owner would likely easily be able to sign cross-licensing deals with other patent holders.

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